IFCI Q3 net loss balloons to Rs177 crore on high bad loans

As slippages increased, IFCI’s provisioning against bad and doubtful assets as well as write offs nearly trebled to Rs411.49 crore during the third quarter of 2017-18, up from Rs139.87 crore a year ago

New Delhi: Infrastructure lender IFCI Ltd’s net loss ballooned to Rs177 crore in the December quarter of the current fiscal as bad loans shot up, requiring higher provisioning.

The company’s net loss in the October-December period of last fiscal, 2016-17, was about a fourth at Rs45.17 crore. As slippages increased, the provisioning against bad and doubtful assets as well as write offs nearly trebled to Rs411.49 crore during the third quarter of 2017-18, up from Rs139.87 crore a year ago.

IFCI managing director and chief executive officer (CEO) Emandi Sankara Rao said: “Efforts are being made for recovery from stressed assets and non- performing assets (NPAs). Divestment from strategic and project investments is likely to yield results in the near future. The entire financial sector is under stress due to the burden of NPA, significantly in the infrastructure and iron & steel sectors.”

He told reporters that IFCI is no exception to this and large amount of slippage in standard assets to non-standard assets in 2016-17 and in the first quarter of the current fiscal has impacted the operational income and net earnings. Total income of the company rose however by 3.1% to Rs655.53 crore in the December quarter, as against Rs635.55 crore in the year-ago period.

IFCI said that as a change in strategy it is targeting more promising business areas like electronics, logistics, chemicals, pharma, shipping and airports where it has a lending pipeline of Rs4,000 crore. The company will also reduce its investment portfolio and increase the lending book with an aim to disburse about Rs500 crore every month to build a quality asset to make good its balance sheet.

As a consortium partner to banks, IFCI also has an exposure of about Rs2,774 crore in 12 of the accounts that have been referred to the National Company Law Tribunal (NCLT) for loan recovery by the Reserve Bank. “In the list of first 12 (accounts listed by RBI), we have exposure to six cases (to NCLT) and in the second list also we have exposure to six accounts. We have taken all this into cognisance and what is required on a prudential basis provisioning has been done till date,” Rao said.

As a non-banking financial company (NBFC), IFCI is not required to provide for the loans that have turned sour, Rao said, adding that it has done a 51% provisioning as a prudential measure which is voluntary so as to clean up our book and do better next year. The company stock closed 2.17% down at Rs24.80 on BSE.